Pay tax on Property Sales?

When you sell property at a profit that is taxable, you will pay tax on either of two rates:-


1. Capital Gains Tax. The lower rate and consequently first prize. But CGT only applies if the proceeds are "capital" in nature - that is, if you are realising a capital investment; or

2. Income Tax. Where you are held to have been "trading" in the land, the proceeds will be treated as revenue, and taxed as income. Generally a much higher effective rate than CGT, so very much second prize.

So - are you selling a capital asset or are you trading? In very broad terms, if you buy a property intending to hold it as an investment for an extended period of time, you are likely to pay CGT - whereas if you buy it for resale, you are likely to pay income tax.


However that's a very simplified view - the distinction can be a fine one indeed, there is much room for confusion, and every case will be different. Some of the factors likely to be relevant are: -

• How in practical terms have you dealt with the property?

• What is/was your intention in buying/holding/selling it, and has that intention changed?

• How long have you held the property? Note that - contrary to popular perception - this factor isn't in itself decisive, although it could well be relevant in showing what your intention in holding the property was.

A recent Supreme Court of Appeal decision confirms that, although your intention (and any subsequent change in intention) is relevant, the enquiry will go further. The court will also look at whether you are "actually trading, or carrying on a business, at the time of assessment" - a practical test with many pitfalls for the unwary.

The case in question related to the use of "asset realisation" companies, which have in the past been recommended to ensure that sale proceeds are treated as capital rather than as income. The SCA judgment has turned that advice on its head, the Court holding that the assets of realisation companies would be regarded as capital assets "only in special circumstances"; meaning that in most cases, using them may actually do more harm than good.

You may want to transfer your money internationally so contact a money transferring company or bank.
There's likely to be a lot at stake here (assessments of over R1.3m in the case in question!), and how you structure your property purchases and sales could be critical

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So Dubai seems to be settling into its role!

Dubai has witnessed completion of 129 projects since 2009 with 237 out of 450 projects likely to be completed in due course, according to information contained in the government’s bond prospectus posted on the London Stock Exchange.


Quoting Real Estate Regulatory Agency (Rera), the regulatory arm of Dubai Land Department, the prospectus said that 217 property projects have been cancelled as of May 31.

Currently, there were 455 registered developers and 893 registered brokers in Dubai as of May 31. Under the Tayseer (government-guaranteed funding project), 114 projects have been registered.


The prospectus further states that “following the significant price declines since the fourth quarter of 2008 (in part reflecting the withdrawal of speculative buyers from the market), prices have since stabilised in completed developments.”

According to Dubai Statistics Centre, 1148 buildings worth Dh5.7 billion were completed in the first quarter.

So if you want a mortgage for a property in Dubai it is very available today.

The real estate and business services sector accounted for Dh40.3 billion, or 13.7 per cent, of GDP in 2010. The sector registered declines of 19.8 per cent and 2.6 per cent in 2009 and 2010, respectively, having grown by 30.9 per cent and 1.1 per cent in 2007 and 2008, respectively. Meanwhile, the construction sector accounted for Dh27.5 billion and 9.4 per cent of GDP in 2010. The sector fell 19.5 per cent and 14.7 per cent in 2009 and 2010, respectively.

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So how to I get a bond and get an interest rate?

The but bottom line for the banks granting a bond to you

you need to provide

1. all the required and correct documentation – if any deviation unless there is an awesome reason they will not proceed.

2. Your credit record needs to be clean else they will

a. Either decline

b. Offer you less

c. Load your interest rate

3. You need to meet each individual banks criteria – which they change regularly or as the market forces move along and we are briefed on these as these changes happen

4. The same criteria is in place whether you go direct to the bank, have a private banker, use an originator, have been with the bank for 20 years or 1 month.



Interest rates



1. There is presently no rate war between the banks as the rates are at their lowest in 30 years

2. Even if there was no one would admit it – but we pick up the trends as we service all banks

3. Rates are affected by:

a. Amount of deposit – the more the better

b. Clients credit rating, externally at the bureaus and internally at the bank – clean = better

c. How long you been employed

d. Type of employment

e. Self employed versus employed

f. Type of loan – vacant land versus home (vacant land carries a penalty at present), holiday home, commercial etc

g. Age and marital status

h. Bank client who deposits salary at the bank or non-client

i. Paying by debit order versus salary deduction

j. Offering surety such as cash based policy

k. Insurance on your life on the bond

l. Whether you pay more than your bond monthly repayment requirement or not – early payer

m. And other factors which the banks have built in their scoring systems

4. All rates are determined by the banks scoring mechanisms and systems which they have spent R millions on to give them an accurate assessment and hence a score